Cambodia is poised to join a new generation of Asian frontier economies transitioning from low-income to emerging-market. But the path to greater and more shared prosperity requires a solid foundation of sound macroeconomic policies, enabling new growth drivers, tackling a highly dollarized and fragmented financial system, and creating more fiscal policy space to help meet Cambodia's vast development needs. This book first takes a closer look at the key economic challenges Cambodia faces at the current juncture, highlighting Cambodia's structural and financial constraints to growth as well as shifting vulnerabilities as Asia rebalances. It then lays out how a strategy of fiscal and financial sector policies, from creating a fairer and more buoyant tax system to modernizing financial instruments, markets and supervision, can help mobilize the resources and tools needed for one of Asia's youngest and fastest-growing populations to enjoy more self-sustaining and inclusive growth.

Disclaimer: The views expressed in this book are those of the authors and should not be reported as or attributed to the International Monetary Fund, its Executive Board, or the governments of any of its member countries.

Preface

This study on Cambodia documents an economy at the crossroads and focuses on the main fiscal and financial sector challenges that Cambodian policymakers face as they chart a path to greater and shared prosperity. It draws on the findings of technical assistance reports and research papers prepared by IMF staff in the context of the IMF’s annual Article IV consultations with Cambodia during 2010–12. Updates with respect to more recent data and developments are as of July 2013.

The study is the result of a group effort and was prepared by a team led by Olaf Unteroberdoerster and comprising Faisal Ahmed, Nombulelo Duma, Tubagus Feridhanusetyawan, Jung Yeon Kim, Rodolfo Maino, Phurichai Rungcharoenkitkul, Jookyung Ree, and Nujin Suphaphiphat. We thank David Cowen, numerous colleagues, and participants in seminars for helpful comments on earlier drafts of the chapters, and Rosanne Heller for editorial assistance. Sun Mi Lee and To-Nhu Dao provided valuable assistance in preparing the manuscript, and Joanne Johnson of the IMF Communications Department managed the editing and production of this publication.